Texas · Web view(1) the applicant must have, at the time of application for certification, an...

INSURANCE CODE

TITLE 3. DEPARTMENT FUNDS, FEES, AND TAXES

SUBTITLE B. INSURANCE PREMIUM TAXES

CHAPTER 228. PREMIUM TAX CREDIT FOR CERTAIN INVESTMENTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 228.001. GENERAL DEFINITIONS. In this chapter:

(1) "Allocation date" means the date on which

certified investors are allocated premium tax credits.

(2) "Certified capital" means cash invested by a

certified investor that fully funds the purchase price of an

equity interest in a certified capital company or a qualified

debt instrument issued by the company.

(3) "Certified capital company" means a partnership,

corporation, or trust or limited liability company, whether

organized on a profit or nonprofit basis, that:

(A) has as the company's primary business

activity the investment of cash in qualified businesses; and

(B) is certified as meeting the criteria of this

chapter.

(4) "Certified investor" means an insurer or other

person that has state premium tax liability and that contributes

certified capital pursuant to a premium tax credit allocation

under this chapter.

(5) "Early stage business" means a business described

by Section 228.152(a).

(5-a) "Low-income community" has the meaning assigned

by Section 45D(e), Internal Revenue Code of 1986.

(6) "Person" means an individual or entity, including

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a corporation, general or limited partnership, or trust or

limited liability company.

(7) "Premium tax credit allocation claim" means a

claim for allocation of premium tax credits.

(7-a) "Program One" means the program for allocation

and investment of certified capital under this chapter before

January 1, 2007.

(7-b) "Program Two" means the program for allocation

and investment of certified capital under this chapter on or

after January 1, 2007.

(8) "Qualified business" means a business described by

Section 228.201.

(9) "Qualified debt instrument" means a debt

instrument issued by a certified capital company, at par value or

a premium, that:

(A) has an original maturity date that is a date

on or after the fifth anniversary of the date of issuance;

(B) has a repayment schedule that is not faster

than a level principal amortization over five years; and

(C) does not have interest, distribution, or

payment features that are related to:

(i) the profitability of the company; or

(ii) the performance of the company's

investment portfolio.

(10) "Qualified investment" means the investment of

cash by a certified capital company in a qualified business for

the purchase of any debt, debt participation, equity, or hybrid

security of any nature or description, including a debt

instrument or security that has the characteristics of debt but

that provides for conversion into equity or equity participation

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instruments such as options or warrants.

(11) "State premium tax liability" means:

(A) any liability incurred by any person under

Chapter 221, 222, 223, 223A, or 224; or

(B) if the tax liability imposed under Chapter

221, 222, 223, or 224 is eliminated or reduced, any tax liability

imposed on an insurer or other person that had premium tax

liability under Subchapter A, Chapter 4, or Article 9.59 as those

laws existed on January 1, 2003.

(12) "Strategic investment business" means a business

described by Section 228.153(a).

Added by Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec.

1B.001, eff. April 1, 2009.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 87 (S.B. 1969), Sec.

14.001(a), eff. September 1, 2009.

Acts 2013, 83rd Leg., R.S., Ch. 569 (S.B. 734), Sec. 4, eff.

June 14, 2013.

Sec. 228.002. DEFINITION OF AFFILIATE. In this chapter,

"affiliate" of another person means:

(1) a person that is an affiliate for purposes of

Section 823.003;

(2) a person that directly or indirectly:

(A) beneficially owns 10 percent or more of the

outstanding voting securities or other voting or management

interests of the other person, whether through rights, options,

convertible interests, or otherwise; or

(B) controls or holds power to vote 10 percent or

more of the outstanding voting securities or other voting or

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http://www.legis.state.tx.us/tlodocs/83R/billtext/html/SB00734F.HTM


http://www.legis.state.tx.us/tlodocs/80R/billtext/html/HB02636F.HTM

management interests of the other person;

(3) a person 10 percent or more of the outstanding

voting securities or other voting or management interests of

which are directly or indirectly:

(A) beneficially owned by the other person,

whether through rights, options, convertible interests, or

otherwise; or

(B) controlled or held with power to vote by the

other person;

(4) a partnership in which the other person is a

general partner;

(5) an officer, director, employee, or agent of the

other person; or

(6) an immediate family member of an officer,

director, employee, or agent described by Subdivision (5).


1B.001, eff. April 1, 2009.

SUBCHAPTER B. ADMINISTRATION AND PROMOTION

Sec. 228.051. ADMINISTRATION BY COMPTROLLER. The

comptroller shall administer this chapter.


1B.001, eff. April 1, 2009.

Sec. 228.052. RULES; FORMS. The comptroller shall adopt

rules and forms as necessary to implement this chapter, including

rules that:

(1) establish the application procedures for certified

capital companies; and

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(2) facilitate the transfer or assignment of premium

tax credits by certified investors.


1B.001, eff. April 1, 2009.

Sec. 228.053. REPORT TO LEGISLATURE. (a) The comptroller

shall prepare a biennial report concerning the results of the

implementation of this chapter. The report must include:

(1) the number of certified capital companies holding

certified capital;

(2) the amount of certified capital invested in each

certified capital company;

(3) the amount of certified capital the certified

capital company invested in qualified businesses as of January 1,

2006, and the cumulative total for each subsequent year;

(4) the total amount of tax credits granted under this

chapter for each year that credits have been granted;

(5) the performance of each certified capital company

with respect to renewal and reporting requirements imposed under

this chapter;

(6) with respect to the qualified businesses in which

certified capital companies have invested:

(A) the classification of the qualified

businesses according to the industrial sector and size of the

business;

(B) the total number of jobs created by the

investment and the average wages paid for the jobs; and

(C) the total number of jobs retained as a result

of the investment and the average wages paid for the jobs; and

(7) the certified capital companies that have been

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decertified or that have failed to renew the certification and

the reason for any decertification.

(b) The comptroller shall file the report with the

governor, the lieutenant governor, and the speaker of the house

of representatives not later than December 15 of each even-

numbered year.


1B.001, eff. April 1, 2009.

Sec. 228.054. PROMOTION OF PROGRAM. The Texas Economic

Development and Tourism Office shall promote the program

established under this chapter in the Texas Business and

Community Economic Development Clearinghouse.


1B.001, eff. April 1, 2009.

SUBCHAPTER C. APPLICATION FOR AND GENERAL OPERATION OF CERTIFIED

CAPITAL COMPANIES

Sec. 228.101. APPLICATION FOR CERTIFICATION. (a) An

applicant for certification must file the application in the form

prescribed by the comptroller. The application must be

accompanied by a nonrefundable application fee of $7,500.

(b) The application must include an audited balance sheet

of the applicant, with an unqualified opinion from an independent

certified public accountant, as of a date not more than 35 days

before the date of the application.


1B.001, eff. April 1, 2009.

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Sec. 228.102. QUALIFICATION. To qualify as a certified

capital company:

(1) the applicant must have, at the time of

application for certification, an equity capitalization of at

least $500,000 in unencumbered cash or cash equivalents;

(2) at least two principals or persons employed to

manage the funds of the applicant must have at least four years

of experience in the venture capital industry; and

(3) the applicant must satisfy any additional

requirement imposed by the comptroller by rule.


1B.001, eff. April 1, 2009.

Sec. 228.103. MANAGEMENT BY AND CERTAIN OWNERSHIP INTERESTS

OF INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of

insurers, or other persons who may have state premium tax

liability or the insurer's or person's affiliates may not

directly or indirectly:

(1) manage a certified capital company;

(2) beneficially own, whether through rights, options,

convertible interests, or otherwise, more than 10 percent of the

outstanding voting securities of a certified capital company; or

(3) control the direction of investments for a

certified capital company.

(b) Subsection (a) applies without regard to whether the

insurer or other person or the affiliate of the insurer or other

person is authorized by or engages in business in this state.

(c) Subsections (a) and (b) do not preclude an insurer,

certified investor, or any other party from exercising its legal

rights and remedies, including interim management of a certified

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capital company, if authorized by law, with respect to a

certified capital company that is in default of the company's

statutory or contractual obligations to the insurer, certified

investor, or other party.

(d) This chapter does not limit an insurer's ownership of

nonvoting equity interests in a certified capital company.


1B.001, eff. April 1, 2009.

Sec. 228.104. ACTION ON APPLICATION. (a) The comptroller

shall:

(1) review the application, organizational documents,

and business history of each applicant; and

(2) ensure that the applicant satisfies the

requirements of this chapter.

(b) Not later than the 30th day after the date an

application is filed, the comptroller shall:

(1) issue the certification; or

(2) refuse to issue the certification and communicate

in detail to the applicant the grounds for the refusal, including

suggestions for the removal of those grounds.


1B.001, eff. April 1, 2009.

Sec. 228.105. CONTINUATION OF CERTIFICATION. To continue

to be certified, a certified capital company must make qualified

investments according to the schedule established by Section

228.151.


1B.001, eff. April 1, 2009.

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Sec. 228.106. REPORTS TO COMPTROLLER; AUDITED FINANCIAL

STATEMENT. (a) Each certified capital company shall report to

the comptroller as soon as practicable after the receipt of

certified capital:

(1) the name of each certified investor from whom the

certified capital was received, including the certified

investor's insurance premium tax identification number;

(2) the amount of each certified investor's investment

of certified capital and premium tax credits; and

(3) the date on which the certified capital was

received.

(b) Not later than January 31 of each year, each certified

capital company shall report to the comptroller:

(1) the amount of the company's certified capital at

the end of the preceding year;

(2) whether or not the company has invested more than

15 percent of the company's total certified capital in a single

business;

(3) each qualified investment that the company made

during the preceding year and, with respect to each qualified

investment, the number of employees of the qualified business at

the time the qualified investment was made; and

(4) any other information required by the comptroller,

including any information required by the comptroller to comply

with Section 228.053.

(c) Not later than April 1 of each year, each certified

capital company shall provide to the comptroller an annual

audited financial statement that includes the opinion of an

independent certified public accountant. The audit must address

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the methods of operation and conduct of the business of the

company to determine whether:

(1) the company is complying with this chapter and the

rules adopted under this chapter;

(2) the funds received by the company have been

invested as required within the time provided by Section 228.151;

and

(3) the company has invested the funds in qualified

businesses.


1B.001, eff. April 1, 2009.

Sec. 228.107. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not

later than January 31 of each year, each certified capital

company shall pay a nonrefundable renewal fee of $5,000 to the

comptroller.

(b) If a certified capital company fails to pay the renewal

fee on or before the date specified by Subsection (a), the

company must pay, in addition to the renewal fee, a late fee of

$5,000 to continue the company's certification.

(c) Notwithstanding Subsection (a), a renewal fee is not

required within six months of the date on which a certified

capital company's initial certification is issued under Section

228.104(b).


1B.001, eff. April 1, 2009.

Sec. 228.108. OFFERING MATERIAL USED BY CERTIFIED CAPITAL

COMPANY. Any offering material involving the sale of securities

of the certified capital company must include the following

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statement:

By authorizing the formation of a certified

capital company, the State of Texas does not endorse

the quality of management or the potential for earnings

of the company and is not liable for damages or losses

to a certified investor in the company. Use of the

word "certified" in an offering does not constitute a

recommendation or endorsement of the investment by the

comptroller of public accounts. If applicable

provisions of law are violated, the State of Texas may

require forfeiture of unused premium tax credits and

repayments of used premium tax credits.


1B.001, eff. April 1, 2009.

SUBCHAPTER D. INVESTMENT BY CERTIFIED CAPITAL COMPANIES

Sec. 228.151. REQUIRED SCHEDULE OF INVESTMENT. (a) Before

the third anniversary of a certified capital company's allocation

date, the company must make qualified investments in an amount

cumulatively equal to at least 30 percent of the company's

certified capital, subject to Section 228.153(b).

(b) Before the fifth anniversary of a certified capital

company's allocation date, the company must make qualified

investments in an amount cumulatively equal to at least 50

percent of the company's certified capital, subject to Sections

228.152(b) and 228.153(b).


1B.001, eff. April 1, 2009.

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Sec. 228.152. INVESTMENT IN EARLY STAGE BUSINESS REQUIRED.

(a) In this section, "early stage business" means a qualified

business that:

(1) is involved, at the time of a certified capital

company's first investment, in activities related to the

development of initial product or service offerings, such as

prototype development or establishment of initial production or

service processes;

(2) was initially organized less than two years before

the date of the certified capital company's first investment; or

(3) during the fiscal year immediately preceding the

year of the certified capital company's first investment had, on

a consolidated basis with the business's affiliates, gross

revenues of not more than $2 million as determined in accordance

with generally accepted accounting principles.

(b) A certified capital company must place at least 50

percent of the amount of qualified investments required by

Section 228.151(b) in early stage businesses.


1B.001, eff. April 1, 2009.

Sec. 228.153. INVESTMENT IN STRATEGIC INVESTMENT BUSINESS

REQUIRED. (a) In this section:

(1) "Strategic investment area" means an area of this

state that qualifies as a strategic investment area under

Subchapter O, Chapter 171, Tax Code, or, after the date that

subchapter expires, an area that qualified as a strategic

investment area under that subchapter immediately before that

date.

(2) "Strategic investment business" means a qualified

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business that:

(A) has the business's principal business

operations located in one or more strategic investment areas; and

(B) intends to maintain business operations in

the strategic investment areas after receipt of the investment by

the certified capital company.

(b) A certified capital company must place at least 30

percent of the amount of qualified investments required by

Sections 228.151(a) and (b) in a strategic investment business.


1B.001, eff. April 1, 2009.

Sec. 228.154. CERTIFIED CAPITAL NOT INVESTED IN QUALIFIED

INVESTMENTS. A certified capital company shall invest any

certified capital not invested in qualified investments only in:

(1) cash deposited with a federally insured financial

institution;

(2) certificates of deposit in a federally insured

financial institution;

(3) investment securities that are:

(A) obligations of the United States or agencies

or instrumentalities of the United States; or

(B) obligations that are guaranteed fully as to

principal and interest by the United States;

(4) debt instruments rated at least "A" or the

equivalent by a nationally recognized credit rating organization,

or issued by, or guaranteed with respect to payment by, an entity

whose unsecured indebtedness is rated at least "A" or the

equivalent by a nationally recognized credit rating organization,

and which indebtedness is not subordinated to other unsecured

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indebtedness of the issuer or the guarantor;

(5) obligations of this state or a municipality or

political subdivision of this state; or

(6) any other investment approved in advance in

writing by the comptroller.


1B.001, eff. April 1, 2009.

Sec. 228.155. COMPUTATION OF AMOUNT OF INVESTMENTS. (a)

The aggregate cumulative amount of all qualified investments made

by a certified capital company after the company's allocation

date shall be considered in the computation of the percentage

requirements under this subchapter.

(b) A certified capital company may invest proceeds

received from a qualified investment in another qualified

investment, and that investment counts toward any requirement of

this chapter with respect to investments of certified capital.


1B.001, eff. April 1, 2009.

Sec. 228.156. LIMIT ON QUALIFIED INVESTMENT. A certified

capital company may not make a qualified investment at a cost to

the company that is greater than 15 percent of the company's

total certified capital at the time of investment.


1B.001, eff. April 1, 2009.

Sec. 228.157. DISTRIBUTIONS BY CERTIFIED CAPITAL COMPANY.

(a) In this section, "qualified distribution" means any

distribution or payment from certified capital by a certified

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capital company in connection with:

(1) the reasonable costs and expenses of forming,

syndicating, managing, and operating the company, provided that

the distribution or payment is not made directly or indirectly to

a certified investor, including:

(A) reasonable and necessary fees paid for

professional services, including legal and accounting services,

related to the company's formation and operation; and

(B) an annual management fee in an amount that

does not exceed 2.5 percent of the company's certified capital;

and

(2) a projected increase in federal or state taxes,

including penalties and interest related to state and federal

income taxes, of the company's equity owners resulting from the

earnings or other tax liability of the company to the extent that

the increase is related to the ownership, management, or

operation of the company.

(b) A certified capital company may make a qualified

distribution at any time. To make a distribution or payment

other than a qualified distribution, a company must have made

qualified investments in an amount cumulatively equal to 100

percent of the company's certified capital.

(c) If a business in which a qualified investment is made

relocates the business's principal business operations to another

state during the term of the certified capital company's

investment in the business, the cumulative amount of qualified

investments made by the certified capital company for purposes of

satisfying the requirements of Subsection (b) only is reduced by

the amount of the certified capital company's qualified

investments in the business that has relocated.

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(d) Subsection (c) does not apply if the business

demonstrates that the business has returned the business's

principal business operations to this state not later than the

90th day after the date of the relocation.


1B.001, eff. April 1, 2009.

Sec. 228.158. REPAYMENT OF DEBT. Notwithstanding Section

228.157(b), a certified capital company may make repayments of

principal and interest on the company's indebtedness without any

restriction, including repaying the company's indebtedness on

which certified investors earned premium tax credits.


1B.001, eff. April 1, 2009.

SUBCHAPTER E. QUALIFIED BUSINESS

Sec. 228.201. DEFINITION OF QUALIFIED BUSINESS. (a) In

this chapter, "qualified business" means a business that complies

with this section at the time of a certified capital company's

first investment in the business.

(b) A qualified business must:

(1) be headquartered in this state and intend to

remain in this state after receipt of the certified capital

company's investment; and

(2) have the business's principal business operations

located in this state and intend to maintain business operations

in this state after receipt of the certified capital company's

investment.

(c) A qualified business must agree to use the qualified

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investment primarily to:

(1) support business operations in this state, other

than advertising, promotion, and sales operations which may be

conducted outside of this state; or

(2) in the case of a start-up company, establish and

support business operations in this state, other than

advertising, promotion, and sales operations which may be

conducted outside of this state.

(d) A qualified business may not have more than 100

employees and must:

(1) employ at least 80 percent of the business's

employees in this state; or

(2) pay 80 percent of the business's payroll to

employees in this state.

(e) A qualified business must be primarily engaged in:

(1) manufacturing, processing, or assembling products;

(2) conducting research and development; or

(3) providing services.

(f) A qualified business may not be primarily engaged in:

(1) retail sales;

(2) real estate development;

(3) the business of insurance, banking, or lending; or

(4) the provision of professional services provided by

accountants, attorneys, or physicians.


1B.001, eff. April 1, 2009.

Sec. 228.202. RELOCATION OF PRINCIPAL BUSINESS OPERATIONS.

If, before the 90th day after the date a certified capital

company makes an investment in a qualified business, the

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qualified business moves the business's principal business

operations from this state, the investment may not be considered

a qualified investment for purposes of the percentage

requirements under this chapter.


1B.001, eff. April 1, 2009.

Sec. 228.203. EVALUATION OF BUSINESS BY COMPTROLLER. (a)

A certified capital company may, before making an investment in a

business, request a written opinion from the comptroller as to

whether the business in which the company proposes to invest is a

qualified business, an early stage business, or a strategic

investment or low-income community business.

(b) Not later than the 15th business day after the date of

the receipt of a request under Subsection (a), the comptroller

shall:

(1) determine whether the business meets the

definition of a qualified business, an early stage business, or a

strategic investment or low-income community business, as

applicable, and notify the certified capital company of the

determination and provide an explanation of the determination; or

(2) notify the company that an additional 15 days will

be needed to review the request and make the determination.

(c) If the comptroller fails to notify the certified

capital company with respect to the proposed investment within

the period specified by Subsection (b), the business in which the

company proposes to invest is considered to be a qualified

business, an early stage business, or a strategic investment or

low-income community business, as appropriate.


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1B.001, eff. April 1, 2009.

Amended by:


14.003(a), eff. September 1, 2009.

Sec. 228.204. CONTINUATION OF CLASSIFICATION AS QUALIFIED

BUSINESS; FOLLOW-ON INVESTMENTS AUTHORIZED. (a) A business that

is classified as a qualified business at the time of the first

investment in the business by a certified capital company:

(1) remains classified as a qualified business; and

(2) may receive follow-on investments from any

certified capital company.

(b) Except as provided by Subsection (c), a follow-on

investment made under Subsection (a) is a qualified investment

even though the business may not meet the definition of a

qualified business at the time of the follow-on investment.

(c) A follow-on investment does not qualify as a qualified

investment if, at the time of the follow-on investment, the

qualified business no longer has the business's principal

business operations in this state.


1B.001, eff. April 1, 2009.

SUBCHAPTER F. PREMIUM TAX CREDIT

Sec. 228.251. PREMIUM TAX CREDIT. (a) A certified

investor who makes an investment of certified capital shall earn

in the year of investment a vested credit against state premium

tax liability equal to 100 percent of the certified investor's

investment of certified capital, subject to the limits imposed by

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this chapter.

(b) With respect to credits earned as a result of

investments made under Program One, beginning with the tax report

due March 1, 2009, for the 2008 tax year, a certified investor

may take up to 25 percent of the vested premium tax credit in any

taxable year of the certified investor. The credit may not be

applied to estimated payments due in 2008.

(c) With respect to credits earned as a result of

investments made under Program Two, beginning with the tax report

due March 1, 2013, for the 2012 tax year, a certified investor

may take up to 25 percent of the vested premium tax credit in any

taxable year of the certified investor. The credit may not be

applied to estimated payments due in 2012.


1B.001, eff. April 1, 2009.

Amended by:


14.004(a), eff. September 1, 2009.

Sec. 228.252. LIMIT ON PREMIUM TAX CREDIT. (a) The credit

to be applied against state premium tax liability of a certified

investor in any one year may not exceed the state premium tax

liability of the investor for the taxable year.

(b) A certified investor may carry forward any unused

credit against state premium tax liability indefinitely until the

premium tax credits are used.


1B.001, eff. April 1, 2009.

Sec. 228.253. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED.

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(a) A certified investor must prepare and execute a premium tax

credit allocation claim on a form provided by the comptroller.

(b) The certified capital company must have filed the claim

with the comptroller on the date on which the comptroller

accepted premium tax credit allocation claims on behalf of

certified investors with respect to Program One or Program Two,

as applicable, under the comptroller's rules.

(c) The premium tax credit allocation claim form must

include an affidavit of the certified investor under which the

certified investor becomes legally bound and irrevocably

committed to make an investment of certified capital in a

certified capital company in the amount allocated even if the

amount allocated is less than the amount of the claim, subject

only to the receipt of an allocation under Section 228.255.

(d) A certified investor may not claim a premium tax credit

under Section 228.251 for an investment that has not been funded,

without regard to whether the certified investor has committed to

fund the investment.


1B.001, eff. April 1, 2009.

Amended by:


14.005(a), eff. September 1, 2009.

Sec. 228.254. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The

total amount of certified capital for which premium tax credits

may be allowed under this chapter for all years in which premium

tax credits are allowed is:

(1) $200 million for Program One; and

(2) $200 million for Program Two.

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(b) The total amount of certified capital for which premium

tax credits may be allowed for all certified investors under this

chapter may not exceed the amount that would entitle all

certified investors in certified capital companies to take total

credits of $50 million in a year with respect to Program One and

$50 million in a year with respect to Program Two.

(c) A certified capital company and the company's

affiliates may not file premium tax credit allocation claims with

respect to Program One or Program Two, as applicable, in excess

of the maximum amount of certified capital for which premium tax

credits may be allowed for that program as provided by this

section.


1B.001, eff. April 1, 2009.

Amended by:


14.006(a), eff. September 1, 2009.

Sec. 228.255. ALLOCATION OF PREMIUM TAX CREDIT. (a) If

the total premium tax credits claimed by all certified investors

with respect to Program One or Program Two, as applicable,

exceeds the total limits on premium tax credits established for

that program by Section 228.254(a), the comptroller shall

allocate the total amount of premium tax credits allowed under

this chapter to certified investors in certified capital

companies on a pro rata basis in accordance with this section.

(b) The pro rata allocation for each certified investor

shall be the product of:

(1) a fraction, the numerator of which is the amount

of the premium tax credit allocation claim filed on behalf of the

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investor with respect to Program One or Program Two, as

applicable, and the denominator of which is the total amount of

all premium tax credit allocation claims filed on behalf of all

certified investors with respect to that program; and

(2) the total amount of certified capital for which

premium tax credits may be allowed with respect to that program

under this chapter.

(c) The maximum amount of certified capital for which

premium tax credit allocation may be allowed on behalf of a

single certified investor and the investor's affiliates with

respect to Program One or Program Two, as applicable, whether by

one or more certified capital companies, may not exceed the

greater of:

(1) $10 million; or

(2) 15 percent of the maximum aggregate amount

available with respect to that program under Section 228.254(a).


1B.001, eff. April 1, 2009.

Amended by:


14.007(a), eff. September 1, 2009.

Sec. 228.256. TREATMENT OF CREDITS AND CAPITAL. In any

case under this code or another insurance law of this state in

which the assets of a certified investor are examined or

considered, the certified capital may be treated as an admitted

asset, subject to the applicable statutory valuation procedures.


1B.001, eff. April 1, 2009.

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Sec. 228.257. TRANSFERABILITY OF CREDIT. (a) A certified

investor may transfer or assign premium tax credits only in

compliance with the rules adopted under Section 228.052.

(b) The transfer or assignment of a premium tax credit does

not affect the schedule for taking the premium tax credit under

this chapter.


1B.001, eff. April 1, 2009.

Sec. 228.258. IMPACT OF PREMIUM TAX CREDIT ON INSURANCE

RATEMAKING. A certified investor is not required to reduce the

amount of premium tax included by the investor in connection with

ratemaking for an insurance contract written in this state

because of a reduction in the investor's Texas premium tax

derived from premium tax credits granted under this chapter.


1B.001, eff. April 1, 2009.

Sec. 228.259. RETALIATORY TAX. A certified investor

claiming a credit against state premium tax liability earned

through an investment in a company is not required to pay any

additional retaliatory tax levied under Chapter 281 as a result

of claiming that credit.


1B.001, eff. April 1, 2009.

SUBCHAPTER G. ENFORCEMENT

Sec. 228.301. ANNUAL REVIEW BY COMPTROLLER. (a) The

comptroller shall conduct an annual review of each certified

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capital company to:

(1) ensure that the company:

(A) continues to satisfy the requirements of this

chapter; and

(B) has not made any investment in violation of

this chapter; and

(2) determine the eligibility status of the company's

qualified investments.

(b) Each certified capital company shall pay the cost of

the annual review according to a reasonable fee schedule adopted

by the comptroller.


1B.001, eff. April 1, 2009.

Sec. 228.302. DECERTIFICATION OF CERTIFIED CAPITAL COMPANY.

(a) A material violation of Section 228.105, 228.106, 228.107,

228.151, 228.152, 228.153, 228.154, 228.155, 228.156, 228.202, or

228.204 is grounds for decertification of a certified capital

company.

(b) If the comptroller determines that a certified capital

company is not in compliance with a law listed in Subsection (a),

the comptroller shall notify the company's officers in writing

that the company may be subject to decertification after the

120th day after the date the notice is mailed unless the company:

(1) corrects the deficiencies; and

(2) returns to compliance with the law.

(c) The comptroller may decertify a certified capital

company, after opportunity for hearing, if the comptroller finds

that the company is not in compliance with a law listed in

Subsection (a) at the end of the period established by Subsection

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(b).

(c-1) Notwithstanding any other provision of this section,

the comptroller may decertify a certified capital company if the

comptroller receives a request in writing from the certified

capital company stating that the certified capital company has

made qualified investments in an amount cumulatively equal to 100

percent of the company's certified capital.

(d) Decertification under this section is effective on

receipt of notice of decertification by the certified capital

company.

(e) The comptroller shall notify any appropriate state

agency of a decertification of a certified capital company.


1B.001, eff. April 1, 2009.

Amended by:

Acts 2015, 84th Leg., R.S., Ch. 53 (H.B. 3031), Sec. 1, eff.

May 21, 2015.

Sec. 228.303. ADMINISTRATIVE PENALTY. (a) The comptroller

may impose an administrative penalty on a certified capital

company that violates this chapter.

(b) The amount of the penalty may not exceed $25,000. Each

day a violation continues or occurs is a separate violation for

the purpose of imposing the penalty. The amount of the penalty

shall be based on:

(1) the seriousness of the violation, including the

nature, circumstances, extent, and gravity of the violation;

(2) the economic harm caused by the violation;

(3) the history of previous violations;

(4) the amount necessary to deter a future violation;

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(5) efforts to correct the violation; and

(6) any other matter that justice may require.

(c) A certified capital company assessed a penalty under

this chapter may request a redetermination as provided by Chapter

111, Tax Code.

(d) The attorney general may sue to collect the penalty.

(e) A proceeding to impose the penalty is a contested case

under Chapter 2001, Government Code.


1B.001, eff. April 1, 2009.

SUBCHAPTER H. RECAPTURE AND FORFEITURE OF PREMIUM TAX CREDITS

Sec. 228.351. RECAPTURE AND FORFEITURE OF PREMIUM TAX

CREDIT FOLLOWING DECERTIFICATION. (a) Decertification of a

certified capital company may, in accordance with this section,

cause:

(1) the recapture of premium tax credits previously

claimed by the company's certified investors; and

(2) the forfeiture of future premium tax credits to be

claimed by the investors.

(b) Decertification of a certified capital company on or

before the third anniversary of the company's allocation date

causes the recapture of any premium tax credits previously

claimed and the forfeiture of any future premium tax credits to

be claimed by a certified investor with respect to the company.

(c) For a certified capital company that meets the

requirements for continued certification under Section 228.151(a)

and subsequently fails to meet the requirements for continued

certification under Subsection (b) of that section:

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(1) any premium tax credit that has been or will be

taken by a certified investor on or before the third anniversary

of the allocation date is not subject to recapture or forfeiture;

and


taken by a certified investor after the third anniversary of the

company's allocation date is subject to recapture or forfeiture.

(d) For a certified capital company that has met the

requirements for continued certification under Section 228.151

and is subsequently decertified:


taken by a certified investor on or before the fifth anniversary

of the allocation date is not subject to recapture or forfeiture;

and

(2) any premium tax credit to be taken after the fifth

anniversary of the allocation date is subject to forfeiture only

if the company is decertified on or before the fifth anniversary

of the company's allocation date.

(e) For a certified capital company that has invested an

amount cumulatively equal to 100 percent of the company's

certified capital in qualified investments, any premium tax

credit claimed or to be claimed by a certified investor is not

subject to recapture or forfeiture under this section.


1B.001, eff. April 1, 2009.

Sec. 228.352. NOTICE OF RECAPTURE AND FORFEITURE OF PREMIUM

TAX CREDIT. The comptroller shall send written notice to the

address of each certified investor whose premium tax credit is

subject to recapture or forfeiture, using the address shown on

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the investor's last premium tax filing.


1B.001, eff. April 1, 2009.

Sec. 228.353. INDEMNITY AGREEMENTS AND INSURANCE

AUTHORIZED. (a) A certified capital company may agree to

indemnify, or purchase insurance for the benefit of, a certified

investor for losses resulting from the recapture or forfeiture of

premium tax credits under Section 228.351.

(b) Any guaranty, indemnity, bond, insurance policy, or

other payment undertaking made under this section may not be

provided by more than one certified investor of the certified

capital company or affiliate of the certified investor.


1B.001, eff. April 1, 2009.

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